The Money Files

by
A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

About this Blog

RSS

Recent Posts

How to read a bridge (and use one on your project)

What recruiters want from project managers (and what the project management industry thinks they want)

How much do you cost your project?

Easy illustrations for your project meetings

7 Reasons to crash your schedule

How to read a bridge (and use one on your project)

Categories: methods, reports, tips

A bridge is a way of displaying financial information in visual format. You might also know it is as a waterfall chart, or ‘the one with the flying bricks that looks like something from Mario’. It’s just a way of showing how an initial position has been affected by subsequent changes, so you can see why that would be useful for a company’s financial position. It can show changes that are positive and changes that are negative, and ends up with the new cumulative position as you can see in this diagram.

This picture shows a completely made up scenario, but I think it illustrates a point. In September, the starting position for this department was $75,000. This could represent value, profit or anything else. Then there were some things that changed. These are illustrated by the small floating boxes: the first change that happened was a positive improvement of $16,000. Then there were some other criteria, inputs and changes that also increased the situation positively.

Now we come to the black boxes. These on my chart represent money out, so let’s say this department spent $2,000 on some new software licences and $1,000 on a big party for everyone. This has had an impact on the net position so if my maths is right, the closing position on the graph, the situation in October, is now $100,000.

Great. But how is this relevant to projects?

Typically this type of bridge is used to represent financial information and you have financial information on your project, don’t you? I think it is a great way to present the impact of changes on your project budget to stakeholders. It’s useful because it’s a good visual representation of how you got from there to here and where the money went.

So you could use it to show the financial changes on your project, but there is nothing to stop you using the same layout to display other sorts of changes. Take this version, for example.

This shows you the situation in September in terms of project days. There are 150 days allocated to this project. Then there are a number of changes put forward. The green boxes show what would happen if you add those changes – the number of days spent on the project goes up (it’s not rocket science really). There are also some changes that save you time on the project. Let’s say that the big one, the 20 day time saving, is because the project sponsor has decided that the overseas office isn’t going to be included in this initiative after all, so there is no need to train those team members and you can save a whole lot of time. Another little change knocks 3 days off your project total.

If all these changes are approved, your project will now take 152 days.

When you are looking at individual changes at the change board, some stakeholders might find it hard to keep approving changes that add time. Two changes that add 10 days each? That’s huge. But when they see all the changes on the table that month laid out like this they can see that approving them all only adds 2 days to the project overall. That’s a very different story.

Of course, you might not want all those changes approved – there might be some stupid suggestions in there or functionality that would be better pushed off to a Phase 2. But using this bridge diagram gives you a new way to present the same data to stakeholders and help them decide on the impact overall.

I hope you find it useful!

Posted on: September 16, 2014 05:20 AM | Permalink | Comments (0)

What recruiters want from project managers (and what the project management industry thinks they want)

Categories: recruitment

What do employers want from project managers? If you are in the market for a new job, then a study in Project Management Journal* may give you the answer. The researchers looked at over 760 jobs and documented what recruiters were asking for. What came out on top might surprise you.

The top 5 skills requested by recruiters

OK, the first one on the list won’t surprise you at all: employers are looking for project managers with good communication skills. ‘Communication’ covers reporting, presenting and interpersonal skills. The top five skills list looks like this:

  1. Communication (61% of adverts asked for this)
  2. Technical skills (43%)
  3. Stakeholder management (41%)
  4. Cost management (37%)
  5. Time management (32%).

What professional bodies tell us is important

The interesting thing about this study is that the researchers compare what job ads ask for to what the project management professional bodies and literature tell us is important. In other words, they are comparing supply (project managers developing professionally through well-trodden credentials) and demand (what employers actually want).

Leadership, for example, is the thing that is most talked about at the moment in the professional project management world. The researchers say it is the hot topic for professional bodies and in professional development for project managers. But the job adverts say it is only in 8th position when it comes to being a desirable skill for a job candidate. Employers would rather have someone good planning skills (the 7th most requested competency) rather than a leader.

Another interesting fact for readers of this blog is that cost management comes out so highly in the adverts. It doesn’t feature at all in the top ten skills that project management literature tells us is important. We (the collective project management industry) are not supplying project managers with good cost management skills because it is not considered an essential skill. The employers beg to differ and count being able to balance the books as one of the top five. In fact, cost management features as a top five skill across three of the five industries studied: construction, engineering and government all rank cost management as essential. It doesn’t feature in the top five for ICT or healthcare projects (but that isn’t to say it isn’t in the top ten – this data isn’t given).

Time management is the same: the literature doesn’t rate this as a critical skill for project managers, but the research shows that employers value it very highly. Stakeholder management is in the same situation: a top five skill for recruiters but only ranking number 15 on the list of things that the global project management body of knowledge and literature think a project manager should be able to do.

So are professional bodies teaching the wrong things?

Professional bodies and the project management body of literature do not stress an importance on cost management, time management or stakeholder management and they do focus on leadership. This doesn’t align to what employers are asking for, based on this study of job adverts. So, are professional bodies focusing on the wrong things?

I don’t think professional bodies are focusing on the wrong things. I don’t think employers are asking for the wrong things either. The two sets of requirements are very different: a national or international project management association is focused on helping project managers be the very best that they can be based on the received wisdom and years of research into what makes project successful. An employer wants someone who can deliver a project and fit into their team and their existing project culture. Now.

There may also be something else at play: employers want people who can deliver in a very dynamic market place and perhaps the recognised industry standards for project management haven’t yet caught up. We’ve seen the introduction of stakeholder management in the latest PMI standards so there is definitely a shift towards aligning the knowledgebase with the practical skills that project managers need to be successful at work.

If nothing else, this study might explain why you are finding it so difficult to fill project management positions in your business!

 

* Ahsan, K., Ho, M. Khan, S. ‘Recruiting Project Managers: A Comparative Analysis of Competencies and Recruitment Signals from Job Advertisements’, Project Management Journal, Vol. 44, No. 5, pp36-54

Posted on: September 05, 2014 05:06 AM | Permalink | Comments (1)

How much do you cost your project?

Categories: business case

Have you ever sat in a meeting that has started late and wondered how much money it has cost the company to have all those subject matter experts sitting around doing nothing? If you haven’t, maybe you should. It would certainly encourage you to be more efficient in meetings!

Whether you do timesheets or not, or cross-charge your client or not, your time on a project has a financial cost. Let’s look at what that is made up of.

Direct costs

Recruitment costs related to hiring you in the first place: placing an ad, holding interviews, preparing materials

Direct costs are the tangible ones that related to your pay and benefits. They include:

  • Salary and ‘on’ costs such as national insurance and employers’ taxes
  • Benefits like pension contributions, healthcare, car allowance, childcare schemes, discounted gym memberships and so on
  • Cash benefits like a bonus
  • Your phone bill (assuming the device is funded by your employer and they don’t operate a Bring Your Own Device scheme).

All pretty clear so far.

Indirect costs

These are costs of turning up to work and are incurred by all employees. They are quite hard to work out and you might find some financial whizz in the business has done it but normally you wouldn’t know about these.

  • The cost of heating and lighting your workspace in the office
  • Tea, coffee, sugar, mugs (including breakages), spoons, the dishwasher, washing up liquid etc
  • Stationery like pens, printer paper, staples
  • Software licences for the applications you use
  • Hardware costs for your laptop, phone or tablet including keyboard, mouse, monitor, docking station, laptop bag, headset etc
  • Insurance both for you as an individual for example when you are travelling on company business and also for any expensive kit that you have.

Still with me?

Hidden costs

Then there are other costs that don’t appear on any balance sheet. These are the hidden costs of being an employee.

  • The cost of not being as productive or effective as you could or should (consciously like taking extra long tea breaks unconsciously or through other factors)
  • The cost of not tackling poor performance in your project team, such as failing to deal with conflicts that lead to low morale and lower performance
  • The cost of not being innovative. Who has time to factor in ‘innovation afternoons’ on a project? Lack of innovation (or the time to be innovative) can cost businesses a lot in terms of being first to market with a product or just generally working smarter
  • The cost of bureaucracy. Layers of bureaucracy on your project slow things down or add expensive admin loops.

How do you prove your worth?

OK, we can’t put a financial figure on the total of all of these but you can see that on any given day it could run to a substantial amount. On days where you work really hard and effectively from your home office (and therefore pay for your own heating, lighting and tea) and sort out a lingering personnel problem on the project team you would cost your company less than a day where all your meetings started late so there was a lot of sitting around in the office.

Regardless of the figure – and it really doesn’t matter what it is – the point is that your time on a project is worth something. How do you prove this to your manager?

No one is going to ask you at the end of the year whether you have contributed adequately to cover your ‘worth’. Your employment is not a profit and loss account. But it is a good idea to have some ideas prepared to make it clear to them that you are a valuable employee. That could be anything from taking part in external conferences to raise the company’s profile locally to gaining a credential to increase your confidence to delivering a project that generates millions of dollars of revenue.

I can’t tell you what the answer is but I do know that subconsciously employers do think about these things and do know who is a valuable employee and who is less of an asset to the team. They might not use pure financial terms to quantify your contribution, but they will be aware of what contribution you make and how that compares to others in the department.

Can you justify your contribution if asked?

I’d be interested to hear if you have ever worked out the cost of a slow-to-start meeting or if you have calculated your contribution in financial terms. Why not let us know what happened in the comments?

Posted on: August 26, 2014 11:41 AM | Permalink | Comments (0)

Easy illustrations for your project meetings

Categories: team, tips

You know how they say a picture is worth a thousand words? Well, at ProjectManagement.com this month we are really testing that theory with the features on visual project management. And not wanting to miss out, I thought I would share some drawing tips with you.

Drawing? If you are thinking now that you can’t draw, bear with me. By the end of this article you will be able to, I promise.

First, let’s think about why you should be using illustrations and pictures in your project meetings. It’s easy to come up with lots of reasons:

  • It’s fun
  • Drawings help explain complicated concepts
  • People remember drawings better than lists
  • Drawings help get everyone on the same page (ha ha! You know what I mean)
  • Drawings help remove misunderstandings about processes.

And I’m sure you can think of other reasons.

When can you use illustrations in your project meetings? There are lots of times when it is appropriate, for example:

  • Requirements elicitation workshops
  • Solution design workshops
  • Process workshops
  • Change management meetings
  • Long meetings that need something extra to keep the attendees engaged
  • Any time when you are facilitating a session and taking notes on a flip chart.

OK? Let’s get started.

Drawing people

I hated drawing at school so if I can do this, then anyone can. Think of people as a five-pointed star. Then replace the top point with a head, like in the illustration below. An easy person! You can make it look as if the person is pointing, and put them together around an object to represent breakout sessions or collaborative working.

It doesn’t take much to adapt the star concept to have pointy arms and lots of legs to represent a group. I know this particular group only has 5 legs which isn’t realistic. Six would have been better (although there are 4 heads in the front row so someone is still missing out). But you still know what it relates to, don’t you? You can see that this could represent a client group, a project team, a user community… anything.

Illustrating processes

Process maps are represented in a particular way when you are using Visio or similar to put them together in their final version. But in a workshop, you can have much more flexibility about how you draw out processes on flip charts or illustrate them on slides. And there are likely to be some processes that are discussed in meetings where you don’t want a full-blown detailed process map and a quick illustration to show that there is a process will do just fine.

Arrows are great as shortcut symbols for processes. It’s easy to draw a basic arrow, I’m sure everyone can do that. A few dotted lines and it becomes the most basic process diagram. You can write in the sections if you want to show what happens where (maybe useful for illustrating the project lifecycle in a kick off meeting?). Where your process has several different end points (like accept, reject or hold changes) you can give your arrow multiple-heads, like in the picture below.

One of my favourite types of arrow is the twisty one. It can stand for lots of things but it represents transformation. So something goes in, something happens and an output falls out the other side. It could mean that software code is quality checked, or that ‘the magic happens’ in a black box process that is being provided by a third party. But it is fiendish to draw, at least that’s what I thought.

I learned how to draw the twisty arrow and the other elements at the Oredev IT conference a few years ago, in a session about visual recoding. The speaker broke it down and I have done the same for you in the picture below.

So now you have the tools to illustrate your meetings, why not give it a go?

Posted on: August 23, 2014 05:21 AM | Permalink | Comments (0)

7 Reasons to crash your schedule

Categories: scheduling

Too lateCrashing your schedule is hard work and not something that is advisable in many cases. So why would you do it? Here are 7 reasons why schedule crashing might be the right thing to do.

1. To get the greatest schedule compression

The main reason for crashing your schedule is to get the project done faster. If you need to bring your project’s end date forward then crashing gives you the most schedule compression for the least impact and the smallest cost.

2. When part of the project jeopardises progress

You could also look at crashing when you are facing one part of the project putting the rest of the project at risk. If a particular workstream isn’t going well it could suddenly become the route of the critical path. That might be OK, but equally you might feel that this difficult strand of work is going to hold the rest of the project to ransom. Crashing the schedule around those tricky tasks is one way to get yourself out of difficulty.

3. When meeting a fixed deadline

Projects require change and changes (however formal and appropriate your change control processes) have a habit of adding more time into the plan. When you are dealing with fixed date projects that’s not a good thing. So what happens when your necessary and obligatory changes start adding more time to your fixed date project? You have two choices: tell the project sponsor that you can’t do it and that your end date has to change or try crashing and see if you can claw back some time.

Whether you choose to crash or not will largely depend on your relationship with your project sponsor and how ‘fixed’ your fixed date project really is. I know that many project managers are given a fixed date to deliver by but with this often has some flexibility (especially if the compulsory changes that add more time are requested by the project sponsor).

4. When you are delayed

Delays early in the project necessarily have an impact on later work. You might consider crashing your schedule as a way to make up for some of the lost time.

5. When the team is needed on other work

And now we reach the reasons that are to do with resources. Your project simply might not be the most important thing happening in the business right now. Your team might be needed on other projects – or at least a particular subject matter expert might be.

Crashing your schedule is one way to free up certain resources more quickly. You could look at crashing a workstream so that your critical resources are available for other tasks or projects. The alternative to this is that you let them go (or are asked to let them go and can’t say no) and then find someone else to do the work. That’s a valid route too but depending on how far you are through the project you might find it easier to simply crash and deliver what you can with the original resources earlier.

6. When another resource is free

Sometimes the opposite happens – more resources suddenly become available. Ooo, more people for your project. The impact this can have on your schedule can go one of two ways:

  • You add an additional resource, refocus the resource allocation and deliver on certain tasks faster

Or

  • You add an additional resource and it takes them ages to get up to speed so actually you don’t make any time saving at all.

Only you will know which of these scenarios is most likely on your project, and who the extra resource is matters hugely. A junior programmer who has no experience on your project is not likely to gain you much time. But an experienced technical architect who has always kept half an eye on the project and now is available to complete some solution design work alongside your existing resources should speed things up for you dramatically.

7. When another resource needs training

Finally, you may face a situation where you have a resource who is not contributing effectively to the project because they simply don’t have the skills. This hopefully doesn’t happen to you too often – ideally as project managers we would select people for the project team who have the skills we need to get the job done. However, I’m sure you are aware of situations where either ‘the skills we need to get the job done’ were not defined or changed halfway through the project or we couldn’t get a resource with the appropriate experience allocated to the project.

If you have to let someone go on training they obviously won’t be working on the project during that time. If they aren’t working on the project, then their tasks won’t get done. If you don’t have someone else to pick up their work, this will push their overall delivery milestones out.

You may find that crashing the schedule gives you some more slack around their work – either for them to get work done before they go on training (probably not if they don’t have the skills to do their work in the first place) or to speed things up when they get back.

Would you agree with these? What other reasons have you found in the past to crash your schedule? Let us know in the comments.

Posted on: August 19, 2014 11:43 AM | Permalink | Comments (2)
ADVERTISEMENTS

"You can lead a horticulture, but you can't make her think."

- Dorothy Parker

ADVERTISEMENT

Sponsors